AVP Technical’s Hrishikesh Yedve on election results’ impact on markets: On June 4, 2024, the Indian stock markets experienced a significant decline, marking the steepest fall since March 2020. This was primarily due to the initial trend indicating that the BJP had won fewer seats than predicted in the exit polls, causing a sense of nervousness among investors. As a result, the Nifty index closed the day on a negative note at 21,884.5. The volatility index (VIX) also reached its highest level since February 2022, reaching 31.71.
From a technical perspective, the index confirmed a hanging man candle and remained below it, indicating weakness. Immediate support for the index can be expected around 21,800 levels, followed by 21,250 where the 200-DEMA is located. However, in the near term, the levels of 22,800 and 23,340 are expected to pose significant obstacles. The Bank Nifty index also opened on a negative note and remained under pressure throughout the day, eventually settling at 46,928.60. Technically, the Bank Nifty has sustained below a low of the hanging man candlestick pattern, further indicating weakness. Key support for the index is expected near 46,350, where the 100-DEMA is located, while resistance can be seen near 51,130 levels.
HDFC Securities’ Deepak Jasani on election results’ impact on markets: Deepak Jasani, Head of Retail Research at HDFC Securities, reported that Nifty experienced a significant decline on June 04, marking its worst session in over four years. This drop was attributed to the election results indicating that the Bharatiya Janata Party may need alliance partners to secure a third term in power. By the end of the trading day, Nifty was down by 5.93% or 1379.4 points, closing at 21884.5. Cash market volumes on the NSE reached a record high of Rs.2.71 lakh cr. The broader market indices saw even greater declines compared to Nifty, with the advance decline ratio hitting a low of 0.10:1 – the lowest since March 13, 2024.
Asian shares retreated on Tuesday due to signs of weakness in the US economy, despite data suggesting a potential interest rate cut. Meanwhile, Indian markets plunged amid expectations of a less decisive victory for India’s prime minister. European stocks also slipped, particularly in energy stocks due to weakness in crude oil prices, as investors remained cautious ahead of the European Central Bank’s upcoming interest rate decision.
Nifty’s sharp decline on June 04 was a result of the NDA’s underperformance in the election vote count. The index fell significantly, forming a large bearish candle that engulfed the candles of the past three weeks and filled the upgap from the previous day. While uncertainty remains regarding the final election outcome and the formation of the new government, Nifty is expected to fluctuate between 21710 and 22417 in the short term.
Mirae Asset Capital’s Manish Jain on election results’ impact on markets:Manish Jain, Director of the Institutional Business (Equity & FI) Division at Mirae Asset Capital Markets, emphasizes the importance of certainty and policy continuity for investors. He believes that India’s long-term structural growth story is supported by various factors such as GDP, market cap, and demographic dividend. Jain stresses that economic considerations should take precedence, and it is crucial for policymakers to lead the country to greater heights. He expresses confidence in India’s resilience to regime changes, highlighting that good businesses have consistently rewarded investors. Jain suggests that if valuations become more attractive due to certain factors, it presents an even stronger case for investing in India.